Balance Transfer
If you have a significant amount of debt, you have likely seen balance transfer offers come through your mailbox. These can be quite helpful, but you need to know how to shop for the right offer for your needs. Before you sign up for a balance transfer offer, take some time to think about the following things.
First, when considering any type of debt that is going to replace an existing debt, make sure that you are going to save money. You can save money several ways. The most common way to save money on a balance transfer is to get a new debt with a lower interest rate than your existing one. Often these transfer offers come with a low introductory interest rate, sometimes even a 0% introductory APR. This will save you quite a bit of money if you have a high interest rate on your existing debt. You can also save money by paying off the debt sooner. Some offers have you pay more per month, but in the end you will pay less because you will have paid the debt off sooner. Yet a third way to save money is on fees. If your existing credit card has high fees associated with its use, transferring your balance to another card or loan could save you hundreds of dollars over the course of a year.
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| | Chase Platinum MasterCard |
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Intro APR - 0%
Intro Period - 12 Months
Regular APR - 13.74%
Annual Fee - $0
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| Blue From American Express - 0% For 15 Months |
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Intro APR - 0%
Intro Period - Up To 15 Months
Regular APR - 12.24%
Annual Fee - $0
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| Discover More (SM) Card - Top Cashback Offer |
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Intro APR - 0%
Intro Period - 6/12 Months*
Regular APR - 10.99%
Annual Fee - $0
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Another thing to keep in mind when shopping for balance transfer offers is the interest rate you will have after the introductory period. Many of these offers lure you in with a low rate at the beginning, only to hike the rate quite high when you are out of the introductory period. While the final interest rate may not change your decision about a particular offer, make sure you are informed about what to expect. Sometimes you can take advantage of a low rate, and simply transfer the balance at the end of the introductory period to a new card or loan.
Whenever you are applying for credit, make sure that you read all of the fine print associated with the offer. You may find that your transfer offer has a low interest rate, but that there is a high fee that you will be charged for transferring a balance. Also, look to see if there is any repayment period attached to the loan. Some loans charge you a fee if you pay them off early. This will not be the case with a credit card.
If you find a balance transfer offer that appeals to you, fill out the application carefully. It might be helpful to find out the approximate credit limit you will qualify for. This information is usually included in the offer. This will help you to know how much of a balance you can transfer. If you transfer more than the card will allow you to, the credit card company will simply leave some of the balance on your old card.
Once you are approved, the new credit card or loan company will send payment to your existing creditor for the balance you are transferring. You will not have to worry about this step because it will be handled for you. Then, you simply start paying down the new debt. Make sure that you get some form of confirmation that the old debt was paid. Keep this in your records in case there is ever a dispute.
Remember, a balance transfer is a great way to get out from under your high interest credit cards. Since these companies offer you low rates in order to hook you into their offer, you can save a substantial amount of money. Just remember to look at the amount that the interest rate will be at the end of the offer, and keep that in mind as you work to pay off your debt.
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